IVA or BANKRUPTCY?

Question

I currently have an IVA and pay £350 per month.

Would it be wise to go bankrupt so I dont have this big monthly
outgoing? and also what is the disadvantage of becoming bankrupt compared to having an IVA?

Answer 1

It is normally advantageous to set up an Individual Voluntary Arrangement before becoming a bankrupt but you can propose one afterwards; if an Arrangement is approved post-bankruptcy then the debtor can apply to the Court for an annulment of the bankruptcy order.

If an IVA is proposed after a bankruptcy order has been awarded by a county court, it is possible to nominate the Official Receiver to be the supervisor of the arrangement. The Arrangements offered by the Official Receiver are very restricted and have not proved very popular. This type of arrangement is called a Fast Track Voluntary Arrangement and is only suitable in certain cases
In the United Kingdom (UK), bankruptcy (in a strict legal sense) relates only to individuals and partnerships. Companies and other corporations enter into differently-named legal insolvency procedures: liquidation, administration and administrative receivership. However, the term 'bankruptcy' is often used (incorrectly) when referring to companies in the media and in general conversation. Bankruptcy in Scotland is referred to as Sequestration.

A Trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner.

Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in Court a certificate that his investigations are complete.

Answer 2

IVA if you can manage it. With bankruptcy you can be forced to sell all sorts of things up to and including your house (there are several sites on the Net that will give you a compare and contrast) and if you really can't stretch to the £350 then you should talk to the people who arranged your IVA and see whether they can downsize it ... although I wouldn't hold your breath. Much depends on your age and personal circumstances (e.g. how much your creditors could raise by means of a forced sale) but in general an IVA is preferable. Do, however, take some professional advice first and don't just rely on the answers you get here - there are all sorts of twists and turns that the true professionals know about.

Answer 3

With bankruptcy you pay for 3 yrs compared to 5-7 on an IVA. If you can afford to pay £350 pm for your IVA then you'll be expected to make a monthly payment for your bankruptcy, on top of the initial £475 fees to file.
There are certain types of jobs and positions you cant hold while bankrupt and it can affect your tenancy if you rent or want to rent a house.
With bankruptcy any other assets you have - eg house and car, may be sold and the profits used to pay some debts.
Without knowing a lot more about your job, housing status, income and expenditure, assets, future plans its hard for anyone to say which is better for you. Its best to get independent advice eg solicitor, Citizens Advice before you decide. Dont ask the firms that advertise on TV cos most of them are out to do whats most profitable for them, not best for you.

Answer 4

I worked very closely with an IVA company. Stick with the IVA. Most people in dire straits financially would love to qualify for an IVA, it is definately the better option long term, otherwise there wouldnt be so many companies coming up.

It may seem hard but after 5 years, you will be finished and with a clean slate. You take the bankruptcy option, then you are black marked....

Answer 5

That question can't be definitively answered without your current financial situation being thoroughly assessed. If you truly have £350 of disposable income, then you're likely to be hit with a 310 Income Payment Order for 3 years under the bankruptcy rules, which will take a chunk (usually 50%) of the disposable income.

You really need to talk to a specialist in this arena. Try the link below - they helped me when I was struggling, and they didn't charge for the initial consultation!

Answer 6

I know Iva. She's a nice lady.

Answer 7

hi there -
visit this website and post your question there - there are people in similiar situations who can give you *really* good advice -

http://forums.moneysavingexpert.com/forumdisplay.html?f=76

not sure if youve visited it before but it will take you to the debt free wannabe section of the www.moneysavingexpert.com website. hope it helps!

Answer 8

bankrupcy is ok if you dont plan on buying a house for a rew years and it will be shown on your credit file so no credit cards etc!!but you will be sorted after a couple of years!!good luck whatever you do!!xx